Microsoft to pay $179 million in Iowa antitrust settlement

The final settlement details in an antitrust suit brought against Microsoft in …

This past Friday, Iowa's Polk County District Court Judge Scott Rosenberg approved the final $179 million dollar settlement between Microsoft and Iowa customers. The settlement itself was announced last April, but final approval had been withheld as the last details of the decision were worked out.

The settlement itself finishes Iowa's long-running case against Microsoft. Seven years ago, Des Moines lawyer Roxanne Conlin filed suit against the Redmond-based company, claiming that Microsoft had engaged in anti-competitive behavior that caused consumers to pay more for software than they actually would had competition existed. The original lawsuit sought $330 million on behalf of Iowa citizens, but the settled-upon $179 million still represents the largest class action award to date in Iowa.

As for the actual amount of money Iowa consumers can get, the total dollar value is rather underwhelming. Based on the settlement, Iowans who purchased Microsoft products between May 18, 1994, and June 30, 2006, are eligible for:

$16 per copy of Microsoft Windows or MS-DOS

$29 per copy of Microsoft Excel

$10 per copy of Microsoft Word, Works, and Home Essentials software

Half of any unclaimed cash will be donated to Iowa schools in the form of vouchers that can be used to purchase new computer equipment. Microsoft has also agreed to pay $1 million to Iowa Legal Aid, where the money will be used to develop programs aimed at ending domestic abuse.

As is often the result in cases such as this, the big winners are the lawyers. According to the Des Moines Register, over the past seven years, Iowa lawyers working on behalf of their fellow citizens racked up an astounding $75 million in legal fees which Microsoft has also agreed to pay. The aforementioned Roxanne Conlin, who originally brought the suit against Microsoft, has earned an individual fee that comes out to a billable rate of $1,072.50 an hour, including a 43 percent risk premium.

As for Microsoft, the company's willingness to settle the case and move on (including accepting the legal fee arrangements) looks to be partly the result of simple fatigue. According to Microsoft associate general counsel Rich Wallis, MS agreed to settle the Iowa case in order "to put these ancient allegations behind us and focus on building the next generation of great software."

Iowans have until December 14 to file their claims. After that time, the money turns into Microsoft vouchers for use by the State of Iowa. Opponents of the settlement have criticized the vouchers, since those ultimately result in more Microsoft software being distributed throughout the state, letting Microsoft pay a big part of its fine by giving away the very software at the center of the complaint.